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Money Matters – The Age of Abundance and Uncertainty

 

We are at the forefront of what could be the largest wealth transfer in history. Estimates indicate that the parents of Baby Boomers will pass on some 12 trillion dollars in assets to their children. Furthermore, it is estimated that Baby Boomers themselves will pass on 30 trillion dollars to succeeding generations. This type of wealth and property transfer is known as estate planning.

Portrait Michael Thomas

By Michael Thomas

 

Last month, we gained a clearer understanding of abundance and its twelve aspects, of which financial security is just one. With this in mind, special attention must be directed towards estate planning as it is the foundation of  your family’s future peace and abundance.

 

The topic of estate planning is vast. In its most basic form, estate planning determines two things: who will receive your assets at the time of your death, and how your loved ones will receive those assets. Typically such a transfer is done through a Will or a Trust. Statistics show that six out of ten families in America have no financial or estate plan in place. Consider this: of the 33 million wealthiest households in America that are estimated to control $13 trillion in wealth, only 18% have a valid financial or estate plan.

 

The key to estate planning is to clearly outline your vision for: a) How you want your assets distributed at the time of your passing; b) Whether you want those assets distributed outright or left in Trust; c) The knowledge (and peace of mind) that appropriate documents are in place to reflect and carry out your wishes.

 

There are three types of estate plans:

 

  • The “Do nothing” estate plan.
  • The Will-based estate plan.
  • The Trust-based estate plan.

 

I would like to share with you a story as told by a friend, now colleague, about what happened when her family didn’t have a proper estate plan in place:

 

“My husband passed away 18 years ago. His death came as a great shock to me and my two teenage children. I was a housewife and had never had a job. My husband had always assured me that his Will would be in order in the event of his death, but I was in for a harsh awakening during the aftermath of his death as I tried to embrace my new role as a single mother.

 

I discovered that our assets were messily dispersed throughout several states and countries. I had to hire more than ten lawyers to track everything down and the probate court proceedings took almost three years. In the end, I had a mountain of legal expenses and was forced to sell properties well below value. We were ultimately left with only a fraction of the assets. This exhausting experience could have been prevented if we only had worked with qualified financial professionals to set up a Trust and a proper estate plan. As a result, I was motivated to become a financial advisor myself as I wanted to ensure that other families never had to go through a similar experience.” – Juliana G

 

“No middle class family should be without a Living Trust. ” Forbes Magazine

 

Your money contributes to developing peace and abundance for you and your loved ones. Almost all of the costs to settle an estate are voluntary, meaning you can eliminate them with proper planning. By not having an adequate estate plan in place, you compromise your family’s peace and possible financial security after your passing. Additionally, unnecessary family resources such as time (your estate could take years to settle) and family wealth may be lost forever to the expenses needed to settle your estate.

 

Estate planning is typically influenced by one of two emotional states: fear or love.

 

Action Plan

 

– Determine which of the three types of plans your family currently has.

 

– After determining the plan in place, ask yourself which emotional state, fear or love, motivated you in your planning.

 

– If you have not completed an estate plan, ask yourself: Why not?

 

– If you have completed your estate planning, consider this: Have you ever taken the time to read what your documents say?

 

– If you have not read through your documents, how do you know what they say? Do you think that your spouse or children will read them after your passing?

 

– Are there any principles, values, life lessons, words of wisdom, or anything else you would want to share with your family?

 

– If so, write a brief letter to the family as a whole or to specific individuals articulating them. Include this letter with your estate planning documents.

 

– If you have a Trust, has it been funded?

 

In the next installment of this column, we will explore the three types of estate plans, as well as the advantages and limitations of each.

 

Michael Thomas Robinson II is a Certified Estate and Trust Specialist. He assists individuals and families with their financial and estate planning needs, and provides personal and business coaching. Michael also teaches Yoga and meditation: pureplanning.org.

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